08 Idan Ofer, Eastern Pacific Shipping
At Eastern Pacific Shipping, Idan Ofer is fully focused on shipping once again as he tackles the big generational challenges of decarbonisation, digitalisation and next-generation crewing
The shipowner — the younger Ofer on our ranking of influence — has led the charge on LNG dual-fuelled investments this year
A FEW years ago, Lloyd’s List found Idan Ofer still undecided on the big strategic questions he knew were approaching his shipping interests. Today, the focus is clear — and the pace of change is dramatic.
The private portfolio of non-maritime assets has been pushed down the priority list; the power business has been sold to private equity; he has divested his Chinese car manufacturing business; and the “difficult” Pacific Drilling restructuring is done and dusted.
Mr Ofer never left shipping, but it seems he is now fully focused on a generational realignment of one of the biggest private fleets in the world.
Together with a senior management team that includes his son, Gil Ofer, the younger Ofer brother is pursuing an aggressive growth strategy that will account for what he sees as a significant turning point for the industry requiring his full attention.
The strategic pillars of this plan span his responses to the meta challenges of the age: green shipping, industry digitalisation and seafarer wellbeing.
Each pillar comes with a bold plan that would individually land most other players pretty high up this ranking of industry influence. Taken together, it secures Mr Ofer's position as one of the most influential private owners in the industry this year — and likely for many more to come.
Where others have continued to take a wait-and-see position on LNG-fuelled tonnage as a response to the decarbonisation challenge, Mr Ofer has led the charge with around $3bn of dual-fuelled assets either now on order or chartered out.
The debate over LNG’s ‘transitional’ role in the zero emissions pathway for shipping will rumble on around these deliveries.
However, Mr Ofer is convinced that the 20%-plus efficiency gains on the right assets will more than justify their place in the mid-term market and position EPS at the vanguard of the immediate decarbonisation drive.
He was the first independent tonnage-provider to contract a series of LNG dual-fuelled 15,000 teu containerships.
After securing a landmark charter deal with CMA CGM on a 15-year deal at a charter rate of about $55,000 per day, EPS expanded its commitment with options taking the series to 22 vessels.
That has continued with a $270m splash on dual-fuelled suezmax newbuildings and a recent $550m spree on dual-fuelled bulkers at Shanghai Waigaoqiao Shipbuilding.
Outside the LNG-fuelled investments, Mr Ofer has also been testing the waters in green financing, securing the first Asia Pacific green loan this year and implementing a fleet-wide green ship recycling policy.
When it comes to technology Gil Ofer has been leading the EPS accelerator programme, which will ultimately select 30 start-ups whose technologies have the potential to leap-frog the industry forward.
EPS has already started trialing several of the key projects themselves, with AI-powered chartering software, smart bunkering technology and security systems all now being used in the business, while more ‘test and learn’ innovation drives are on the way.
The final pillar of Mr Ofer’s plan looks squarely at the issue of seafarer well-being, starting with the 5,000 crew he employs, for whom he has implemented a ‘life at sea improvement programme’.
Among other initiatives, this will see his ships become fully equipped with state-of-the-art gyms, while he has engaged interior designers to tackle the common and accommodation areas of all his ships to “create an inclusive and collaborative onboard experience”.
That will involve a lot of retrofitting and redecorating. Mr Ofer has shipping interests in more than 200 vessels that total over 15m dwt, the majority of which are managed by his flagship Singapore-based company Eastern Pacific Shipping.
He is also approaching 2020 and beyond with just under 40 newbuilds on the horizon that will ultimately make up more than 20% of his fleet and lower its average age to just below six years.
Outside of the more strategic changes, 2019 also saw a more prosaic expansion of his gas carrier fleet, with the purchase of three large liquefied petroleum gas vessels, establishing EPS as a key niche player in the segment.
This year has also seen him close out the acquisition of the BW Chemical Tankers' fleet of 13 vessels, making his company Ace Quantum a leader in the J19 stainless steel segment.
Yet the transition here is not just one of assets; it looks very much like a strategic rethink.
The old business model of buying 15-year-old ships and bleeding them dry until the last possible scrapping date is well and truly dead, according to those close to Mr Ofer, particularly for a business the size of EPS.
Mr Ofer now talks openly about sustainability, both in environmental terms and that of the business itself.
Clearly there is an aspect of marketing to this generational realignment. The once intensely private, very traditional approach still pursued with great discipline by his older brother Eyal and his sons appears to be evolving into a slicker, more corporate approach for Idan — at least in terms of how the narrative of his strategy is being portrayed to the market.
However, that should not detract from the significance of this shift.
Those inside EPS view these changes as more than a mere strategic tweak and fleet renewal; this is a necessary response to an epoch shift.
There is a palpable sense that for those who do not adapt quickly to the changing environmental, social and technological challenges, the death of dynasties is fast approaching.
For a 200-ship operation with legacy assets and complex commercial partnerships to consider, that represents a decade-long process at least.
However, as one EPS insider put it to Lloyd’s List in a recent conversation: “Without it, our business would be extremely challenging and, in 10 years, you would be questioning our survival. It’s that stark for us.”